Akerlof, Hahn and Litan (2002)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Akerlof, Hahn and Litan (2002)
Title: The copyright term extension act of 1998: An economic analysis
Author(s): Akerlof, G. A., Hahn, R., Litan, R. E., Arrow, K. J., Bresnahan, T. F., Buchanan, J. M., Coase, R. H., Cohen, L. R., Friedman, M., Green, J. R., Hazlett, T. W., Hemphill, C. S., Noll, R. G., Schmalensee, R., Shavell, S., Varian, H.R., Zeckhauser, R. J.
Year: 2002
Citation: Akerlof, G. A., Arrow, K. J., Bresnahan, T., Buchanan, J. M., Coase, R., Cohen, L. R. & Hemphill, C. S. (2002). The copyright term extension act of 1998: An economic analysis. Washington DC: AEI-Brookings Joint Center for Regulatory Studies.
Link(s): Definitive
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About the Data
Data Description: The 'amici' propose an economic model to explain the inefficiency of the copyright extension.
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
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Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
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Abstract

This brief provides an economic analysis of the main feature of the Copyright Term Extension Act of 1998 (CTEA), a twenty-year extension of the copyright term for existing and future works. Taken as a whole, the authors believe that it is highly unlikely that the economic benefits from copyright extension under the CTEA outweigh the additional costs.

Main Results of the Study

  • The longer term for new works provides some increase in anticipated compensation for an author. Because the additional compensation occurs many decades in the future, its present value is small, very likely an improvement of less than 1% compared to the pre-CTEA term. This compensation offers at most a very small additional incentive for an economically minded author of a new work. * The term extension for existing works makes no significant contribution to an author’s economic incentive to create, since in this case the additional compensation was granted after the relevant investment had already been made* The CTEA extends the period during which a copyright holder determines the quantity produced of a work, and thus increases the inefficiency from above-cost pricing by lengthening its duration* The CTEA extends the period during which a copyright holder determines the production of derivative works,which affects the creation of new works that are built in part out of materials from existing works* It is highly unlikely that the economic benefits from copyright extension under the CTEA outweigh the additional costs. Considering the criterion of consumer welfare instead of efficiency leads to the same conclusion, with the alteration that the CTEA’s large transfer of resources from consumers to copyright holders is an additional factor that reduces consumer welfare


Policy Implications as Stated By Author

Comparing the main economic benefits and costs of the CTEA, it is difficult to understand term extension for both existing and new works as an efficiency-enhancing measure. Term extension in existing works provides no additional incentive to create new works and imposes several kinds of additional costs. Term extension for new works induces new costs and benefits that are too small in present-value terms to have much economic effect. As a policy to promote consumerwelfare, the CTEA fares even worse, given the large transfer of resources from consumers to copyright holders.

Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Green-tick.png
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Green-tick.png
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Green-tick.png
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Green-tick.png
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Green-tick.png
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size: 1
Level of aggregation: Economic model
Period of material under study: Non stated


Sample size: 1
Level of aggregation: Present value of additional compensation calculation
Period of material under study: Non stated